Law on Auditing. What it is

Auditing activity is an external financial control of business entities by specialized authorized bodies representing the state or independent non-state firms. The Law "On Auditing" does not provide a clear statement of this concept, but this does not diminish the importance of auditing for business. Very often, state audits of financial statements are closely related to audits performed by auditors. But they are not in any way a substitute for each other.

The Federal Law "On Auditing" regulates the list of those facilities that must pass the audit without fail . These include the public sector, organizations engaged in the circulation of securities, organizations that provide loans, insurance companies and state corporations, non-state pension funds (Article 5 of the Federal Law). If the said objects use budgetary funds, fulfill state orders or work with state property, they are subject to mandatory verification by the Accounting Chamber.

Structure and functions of the bodies regulating audit activity in Russia:

1. The Ministry of Finance is the supreme body that is called upon to coordinate audit activities in the state, giving audit organizations and auditors the right to engage in this type of commercial activity. The main functions of this body are:

- development of a policy on auditing, creation and improvement of the regulatory framework;

- keeping a register of organizations and individuals entitled to conduct independent audit;

- analysis of the state of the scope of audit services in Russia, etc. To perform these functions, the authorized body can freely request various documents.

2. Self-regulating organizations of auditors are non-profit organizations that are included in the state register and unite a certain number of individuals and legal entities. Members of the organization of auditors determine the standards of the activities of auditors, their professional ethics, reporting, take part in training auditors, providing them with the opportunity to upgrade their skills, etc.

3. The audit organization is a commercial structure that is part of the members of one of the self-regulatory organizations of auditors. The law on auditing gives it the right to audit and issue an audit report. State regulation of audit activity does not prevent the observance of audit secrets, if it does not contradict the norms of the current legislation.

Finally, the private auditor is a person who can engage in auditing activities in compliance with all the rules and regulations that are prescribed by the law on auditing activities, as well as the internal rules of the self-regulatory organization of auditors in which it is composed.